Tuesday, January 11, 2011

Barclay's CEO grilled by British Parliament on bonuses

By Julia Werdigier, Dealbook, in New York Times, January 11, 2011Mr. Diamond, who became chief executive of the (Barclay's) bank on Jan. 1, said the banking sector had made mistakes. But he argued that “banks have learned throughout this process,” adding that there was “no lack of effort on our part to recognize and be responsible and to be sensitive to this issue” of bonuses.23 Comments.He declined to say whether he would forgo his bonus this year or comment on reports in the British media that his bonus could be as high as £8 million ($12 million). Barclays’ board has yet to decide on the size of bonuses, he said.During the questioning by members of Parliament, which lasted more than two hours and touched on topics from compensation to competition in the banking industry, Mr. Diamond remained calm and composed.One committee member, Andrea Leadsom, said the debate about bonuses reminded her of “The Emperor’s New Clothes,” saying that banks did not want to acknowledge that there was a problem with big bonus payments at a time when the government’s austerity plan was expected to hurt many people on a lower income.Mr. Diamond said that he was “aware of the emotion around bonuses” and pledged to “show restraint” when it came to pay.But he also said, “I am a businessman who runs a business,” adding that decisions on the size of bonuses needed to be a balance between the expectations of customers, shareholders, employees and regulators.
If Mr. Diamond is speaking for his industry on the European side of the Atlantic, the only reasonable answer to his plea is that the time to put the blame game away from bankers will be if and when they "get it" that supersized bonuses, especially those generated by public funds extended to save the very banks that were headed for collapse, simply have to stop.
The banks can and do set a tone and a level of expectation among corporate boards for remuneration of top executives, and the distance betweent top executive incomes, including stock options, pensions, limousines, theatre and sports tickets for life, permanent access to corporate jets and the like and the wages of ordinary workers both in the banks and in the corporations has widened to its greatest divide in history.
It is that divide that the public will not tolerate, no matter how much pleading Mr. Diamond and his peers do about "stop blaming the banks".